WASHINGTON - US lawmakers on Friday released $88.6 million in
development aid for the Palestinians that they had held up since last
summer, a move that should help ease a fiscal crisis in the
aid-dependent Palestinian economy.

Representative Kay Granger announced she was ready for the entire $147
million in US assistance that had been frozen since August to go to the
Palestinians.

But the other Republican who had a "hold" on the funds, Representative
Ileana Ros-Lehtinen, limited the release to $88.6 million, saying in a
letter to US Secretary of State Hillary Clinton that was all she was
willing to free up.

Ros-Lehtinen also said she was releasing the money with the
understanding it would not be used for "assistance and recovery in
Hamas-controlled Gaza," West Bank road construction, or trade and
tourism promotion in the Palestinian territories. The United States
considers Hamas to be a terrorist organization.

The letter did not say how the freed-up funds would be spent, but
Ros-Lehtinen suggested earlier this week she would be willing to approve
money targeted for water programs, health and food for the
Palestinians.

Both Granger and Ros-Lehtinen had barred expenditure of the US funds
since last year because they objected to the Palestinian push for
recognition at the United Nations. They argued that the path to
Palestinian statehood was through a peace treaty with Israel.

Granger said on Friday she had decided the money should be released for
humanitarian reasons and to help stability in the Palestinian
territories in a time of uncertainty across the Middle East.

"I have taken a strong position on aid to the PA (Palestinian Authority)
to send a message that seeking statehood at the United Nations, forming
a unity government with Hamas and walking away from the negotiating
table with Israel were not pathways to peace," Granger said in a
statement.

"Right now it is in our interest - and the interest of our allies in the
region - to allow aid to flow to address security and humanitarian
concerns."

Granger chairs the House of Representatives appropriations subcommittee
in charge of foreign aid, while Ros-Lehtinen chairs the House Foreign
Affairs Committee.

Technically, the Obama administration can override the objections of
individual lawmakers and spend aid money once it has been appropriated
by Congress.

But successive administrations have generally deferred to holds on funds by key members of relevant committees.

Ros-Lehtinen complained in her letter to Clinton and US Agency for
International Development Administrator Rajiv Shah that the
administration had threatened to spend the money "over congressional
objections" if the lawmakers' holds were not lifted.

"I am disappointed that the administration would employ hard-ball tactics against Congress," she said.

IMF urges donors

Both Granger and Ros-Lehtinen have been pressured by the Obama
administration as well as the international community to release the
development aid, which Congress had appropriated for fiscal year 2011.

There have been growing warnings, including from the International
Monetary Fund, that the Palestinians are facing a deepening financial
crisis due to a drop in aid from Western backers and wealthy Gulf states
as well as Israeli restrictions on trade.

The IMF urged donors last week to meet their aid pledges to the
Palestinian Authority in the Israeli-occupied West Bank, which has a
projected 2012 budget deficit of $1.1 billion.

The United States has committed over $4 billion in bilateral assistance
to the Palestinians since the mid-1990s, the Congressional Research
Service says.

Since fiscal year 2008, the annual US contribution has averaged $600
million, the CRS says. Usually, that includes about $200 million in
direct budgetary aid and $100 million in security aid for training
Palestinian security forces, in addition to development aid, the CRS
says.

Congress voted in December to allow aid to the Palestinians to continue
in fiscal 2012 - the current fiscal year - as long as they were not
admitted as a state to any more UN organizations. The Palestinians won
admission to UNESCO in October, a move that prompted the United States
to cut off funding to that agency.